WASHINGTON, D.C. — The Canadian Trucking Alliance (CTA) submitted comments to the U.S. Federal Motor Carrier Safety Administration supporting a change to simplify how Canadian carriers are insured south of the border.

Under existing arrangements, Canadian insurers are only allowed to sign proof of financial responsibility forms for motor carriers as an agent of a U.S. insurer, rather than directly.

Presently, Canada-domiciled trucking carriers must maintain insurance policies issued by U.S. insurance companies either directly (and thereby maintain two separate polices) or through a "fronting agreement" where the risk is "reinsured" back to the Canadian provider by the American issuer.

The latter option is the most common, but adds expense and administration costs to the 9,000 or so Canadian carriers that haul down south. American carriers operating in Canada, incidentally, don’t face the same burdens.

Lobbying by the CTA and provincial associations led the FMCSA to accept a petition from the Canadian government and proposed an amendment to 49 CFR Part 387 ("Minimum Levels of Financial Responsibility for Motor Carriers"), which would eliminate the need for Canadian insurance companies to link with a U.S. insurance company.

According to the proposal, “it is inappropriate to impose on Canada-based carriers and insurance companies requirements that Canada does not impose on U.S.-based motor carriers and insurance companies.”

FMCSA estimates that, if adopted, the proposal will lead to a net benefit to Canadian carriers of $273 million over a 10-year period. It should be noted that there will be no change in the minimum insurance levels required of Canadian carriers operating in the U.S.

The proposal was identified as a commitment under the Security and Prosperity Partnership (SPP) of North America. Though the matter has taken longer than expected to address, says CTA – the SPP deadline to complete the changes was June 2006 – the organization is pleased to note that progress is now being made.

“The change being proposed is an example of the so-called low-hanging fruit that initiatives such as the SPP were designed to address in the name of North America prosperity,” states David Bradley, CEO of the CTA. “I have to admit to being frustrated by the pace of reform, but in the end FMCSA has done the right thing and we hope to see a final regulation published in the not too distant future.”